New here, question about position sizing for illiquid assets

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Been mostly focused on liquid markets like $EURUSD or equities, where standard stop-loss and position sizing models feel pretty straightforward. I'm starting to look into some smaller-cap cryptos and micro-cap stocks where the liquidity is much thinner. It seems like a lot of the usual advice about fixed percentage risk per trade or tight stop-losses doesn't quite translate when you might move the market just by entering or exiting, or where a stop might get slipped by a huge margin. How do experienced traders here adjust their position sizing and risk management for these less liquid assets without just guessing?

murphy_lotte · Accepted Answer

You're right to question the standard models for illiquid assets. Slippage can be a real killer, and you often have to accept wider stop losses or even consider market-making strategies to get in and out efficiently. Have you looked into averaging in/out, or using limit orders with patience, even if it means missing some immediate moves?

New here, question about position sizing for illiquid assets

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